walmart: the road ahead - mbacasecomp.com kedia. adam ellis. key issue define analyze. evaluate....

WALMART: THE ROAD AHEADGROWTH CONSULTANCY

PRESENTED TO : DOUG MCMILLON, MARC LORE AND THE BOARD MEMBERS

Asper School of Business

Haneen ShoumanNicole PeloquinAditya KediaAdam Ellis

KEY ISSUE

Define Analyze Evaluate Recommend Implement Risks & Mitigate

How does Walmart leverage its core competencies to become the omni-

channel leader?

CRITICAL CHALLENGES


Growing

• Build• Buy

Tradition vs. Native Digital

• Brick and Mortar

• The gap with Amazon

Brand Perception

• Low Cost• Millennial’s

Interest

STRATEGIC GOALS


Diversify in categories and

brands

Reach Millennials and new

demographicsNarrow the Gap

with Amazon

RECOMMENDATION


Offer a seamless brick and click experience by leveraging your core competencies

Merge Expand Lead

WALMART CORE COMPETENCIES


Supply Chain

Logistics

Brick Footprint

Customer Service

Walmart has reinvented the retail industry practices of supply chain and is the leader in that space.

• Relationships• Processes• Software

• Inventory Management• Shipping• Delivery

• Physical stores• Global Presence

• Expertise• Resources

THE GAP


Both traditional and digital native giants understand the game, staying on one extreme is losing.

DigitalPhysical

Wal

mar

t

Am

azonThe Sweet Spot

• Stores Matter• Millennials digital presence

WALMART VS. AMAZON


Walmart’s online sales reflect its traditional retail nature compared to Amazon.

138

444486

1.627.75

89

0

100

200

300

400

500

600

1999 2012 2014

Revenue in $billions

Walmart - Revenue ($ Billion) Amazon - Revenue ($ Billion)

74.10%

2.80%e-Commerce Sales % ofTotal Revenue in 2016

Walmart Amazon

20%

3%

Market share on e-commerce in 2016

Amazon Walmart

GROWTH STRATEGIES TRENDS


Giants looking for growth follow the acquisition model.

Google• eSports in China

Facebook• WhatsApp

Amazon• Whole Foods

WALMART ACQUISITIONSBENEFITS


The benefits of acquiring the knowledge of tech savvy companies out ways the risks.

Digital Walmart

Bonobos

Modcloth

Moosejaw

ShoeBuy.com

Hayneedle

Jet.com

• Customer outreach• New demographics• Multibrands• Wider offerings• Online presence• Digital skills• Skilled resources

WALMART CUSTOMERS& THE MILLENNIALS


Millennials are the shoppers of the future, so how can you get them onboard.

Buying Power

Number 1 generation

Experience-based

purchasingAlignment

with brands

Online and TechsavyLoyal

Aging

Discount Shoppers

Instore shoppers

MillennialsWalmart

ANALYSIS SUMMARY

Strengths Challenges

Opportunities Threats

• Brand perception• Low e-commerce sales• Late to enter online retailing

• Competition• Price War• Imitation

• Changing marketplace• Customer trends• Rising e-Commerce

market in NA

• Retail Industry Leader• Logistics• Supply Chain Optimization• Recent Acquisition


GROWTH STRATEGIES


Acquire 3rd Party Seller Platform

Create a Premium Brand

Brick and Click Experience

ALTERNATIVE 1: ACQUIRE 3RD PARTY SELLER PLATFORM


Walmart will acquire a 3rd

party seller platform to capture millennial buyers

and sellers.

Example: Shopify

Pros Cons

ALTERNATIVE 2: CREATE A PREMIUM BRAND


Walmart will create a premium brand in-house which caters directly to

millennials.

Example: New website & brick and click

Pros Cons

ALTERNATIVE 3: BRICK AND CLICK EXPERIENCE


Expand on Jet.com acquisitions and create brick and click

experience for buyers

Example: JetGuide

Pros Cons

DECISION CRITERIA


Growth

CustomersCore Competencies

• Speed• Potential

• Logistics• Supply Chain• Physical stores

• Loyal • New

DECISION MATRIX


ALTERNATIVE 1:Acquire a 3rd Party SellerShopify

ALTERNATIVE 2:Create a Premium BrandNew Website

ALTERNATIVE 3:Brick and Click ExperienceJet Guide

GROWTHSpeed of Growth & Growth Potential

CUSTOMERSLoyal Current & New Customers

CORE COMPETENCYLogistics, Supply Chain, Physical Stores

RECOMMENDATION



Merge Expand Lead

FUTURE FORWARD


Walmart

Jet Guide

For You. About You.

Captured Millennial sales

Leader in online retailing

First choice for brick and click

Global dominance

STRATEGIC IMPLEMENTATION


• Brick and click experience

• “Jet Guide” brand

Merge experience

• Personalized experience

• Reposition

Expand• Global

outreach

Lead

JET GUIDE- THE ULTIMATE EXPERIENCE


Jet.com

Guide-shops

Jet Guide

“Bonobos model”

Brick and click

PHYSICAL SPACE


Walmart WalmartJet

Guide

JET GUIDE- THE BRAND


Colors: Black and White

Black leather interiors with wall to ceiling glass doors

Products offered: Medium to high end

Perception: Trendy, energetic and experience

“ For you. About you”

CUSTOMER JOURNEY


Website Orders products

Arrives at Jet Guide

Trial or pick up at Jet Guide

Jet Guide store Discusses Orders Delivery at

Jet Guide

SPREADING THE WORD


Awareness

• Social media campaigns

• Celebrity endorsement: Juliana Huff

Conversion

• Discounts• Free returns• Workshops

WHAT DOES JET.COM DO NEXT?


Continue acquiring• Prospect Neiman Marcus

Criteria• Focus on apparel and skin care

WALMART


Continues building on third party seller program

Reposition the brand

Leverage data to meet the food needs of online shoppers

Optimize supply chain

EXPANSION


Open 60 Jet Guides stores in the next year

Focus on Oregon and California

Develop AI and data analytics

Create premium private label apparel

LEAD


Learn

CaterSeamless experience

Canada

China

SCHEDULE AND COSTS ($MM)Year CostQuarter 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Marketing nad Branding For Jet Guide 20 Reconfigure Stores 50 Launch New Stores 1,000 Expand In U.S. and Canada 1,500 Open in China 30 Algorithm Development 50 Reposition 500 Laucnh premium Apparel 50

Total 3,200

2018 2019 2020 2021


E-COMMERCE SALES GROWTH SCENARIOSYear 17/18 18/19 19/20 20/21 21/22 22/23ActualRevenue 489,645.06 493,446.40 497,277.26 501,137.85 505,028.42 508,949.19 Actual E-Commerce Sales 17,042

Optimistic (30%) 18,462 24,001 31,201 40,561 52,730 68,549 Neutral (20%) 22,155 26,585 31,903 38,283 45,940 Pessimistic (10%) 15,650 20,345 22,420 24,707 27,227 30,005

New Revenue 515,601 523,863 533,040 543,311 554,889 % of Business E-Commerce 3% 4% 5% 6% 8% 9%Cost of Revenue 374,051 378,947 383,592 388,614 394,085 400,088 Gross Profit 115,594 136,654 140,271 144,426 149,227 154,801

Project Costs 640 960 960 960 1,600 Net 115,594 136,014 139,311 143,466 148,267 153,201

In the Neutral Scenario, Walmart will control 8% of the Ecommerce Space by 2028


RISKS AND MITIGATIONSPr

obab

ility

Impact

1

2

3

• Access to limited items for top buyers

Customer Adoption

• Change Management Strategy

Operational Changes

• Reposition Purchase Offering through Incentives

Acquisition Difficulties


KPIS AND CONTROLSConcern Control Fiscal 2023

Customer Acquisition # of New Customers 6,000,000

Customer Demographics Median Age 35

E-Commerce Penetration Sales 8%

Growth Year over Year change 10%


RECOMMENDATION



Merge Expand Lead

APPENDIX

US E-Commerce Market 441,059 493,986 558,204 636,352 729,578 842,225 Percentage of E-Commerce Market

1.117 1.12 1.13 1.14 1.1465 1.1544Optimistic Market Share 4.2% 4.9% 5.6% 6.4% 7.2% 8.1%Netural Market Share 3.9% 4.5% 4.8% 5.0% 5.2% 5.5%Pessimistic 3.5% 4.1% 4.0% 3.9% 3.7% 3.6%

walmart: the road ahead - mbacasecomp.com kedia. adam ellis. key issue define analyze. evaluate....

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